Over the past year, for-profit colleges and online schools have been front and center on stage and under the spotlight. And they have been dropping like flies. Next up on the government’s hit list is DeVry Education Group or DeVry University, an education institution that provides both online and traditional classes.
In the previous year, the Federal Trade Commission (FTC) brought a case to DeVry University accusing the institution of misleading advertising regarding employment statistics. The FTC won, and DeVry is slated to pay out over $100 million in fines to the FTC and refunds to DeVry graduates/students.
Here is the breakdown on where that $100 million is going. First and foremost, $50 million (or $49.4 million) is being paid to the Federal Trade Commission; this money is to be paid out to “at the sole discretion of the FTC.” The FTC plans to distribute the funds to affected students and graduates who were harmed by the misleading advertising. The funds are to be distributed starting in 2017.
The rest of the money, $50.6 million, will be paid in the form of debt relief for private student loans exclusively. Keep in mind that this relief does not cover federal loans. $30.35 million is being forgiven for all private education loans that were issued by DeVry and disbursed between 2008 and 2015. The remaining funds, $20.25 million, are to cover expenses such as lab equipment and textbooks.
DeVry was called out on a complete misrepresentation of employment success for DeVry graduates. To put this in perspective, DeVry counted a server job at the Cheesecake Factory as a successful job placement for a technical management degree. On top of claims such as these, DeVry claimed that its bachelor degree graduates earned 15% more compared to matched degrees from all other universities.
In the aftermath of the case, DeVry will be held under greater scrutiny. All student loan forgiveness cases must be reported and on file to the affected students, credit bureaus and collection agencies. DeVry must award all withheld degrees and certificates to students who still had a private student loan balance with DeVry. DeVry is prohibited from misquoting its graduates’ earnings. Any claim to job placements must be on record to help with oversight.
$100 million may be small change to a for-profit college, but this development is part of a string of cases that involved ITT Tech, accrediting agencies, and Globe University. All of these events have shed enormous doubt on for-profit colleges as a whole. All of these are a testament to the Obama administration’s endeavor to increase accountability for higher education.
At any rate, the effect of this government focus has been felt by for-profit institutions across the nation. The actions by the government were desperately needed when considering that for-profit graduates account for over 30% of all student loan default. DeVry University simply took its turn under the government spotlight, but it survived this time around.